The Economic Policy Committee (EPC) is made up of representatives of the Member States and contributes to the work of the Economic and Monetary Affairs Council as regards the coordination of Member State and Community economic policies. The EPC also provides the Commission and the Council with advice in this area, focusing particularly on structural reforms.

The Economic Policy Committee (EPC) was set up in 1974 (under Decision 74/122/EEC) to improve coordination of Member States' economic and budgetary policies. With the entry into the third stage of Economic and Monetary Union (EMU) as from 1 January 1999 and the greater need for closer coordination of economic policies, the Committee's operation and composition needed to be reviewed. This Decision of 29 September 2000 therefore adopts the revised statutes of the EPC. The statutes were revised again in 2003 to take account of the enlargement of the European Union (EU).

Close coordination of Member States' economic policies

The introduction of the euro has made closer coordination of economic policies and sustained convergence of Member States' economic performances all the more necessary. The Luxembourg European Council in 1997 called for enhanced coordination in the final stage of EMU. Closer monitoring of macroeconomic developments and of Member States' structural policies on labour, product and services markets is considered necessary if EMU is to function properly.

The Economic Policy Committee is to assist the Ecofin Council by providing economic analyses and opinions on methodologies and by contributing to the drafting of policy recommendations, particularly on structural policies. It should focus in particular on:

the role and efficiency of the public sector and the long-term sustainability of public finances;

the economic implications of specific policies, such as those relating to the environment, research, development and social cohesion.

Article 99 of the EC Treaty provides for the formulation of broad economic policy guidelines (BEPGs), underpinned by a multilateral surveillance procedure. The EPC is to provide support for the formulation of the guidelines and to contribute to the multilateral surveillance procedure. By producing reports, the EPC will support the work of the Economic and Financial Committee. It will also conduct regular country reviews focused in particular on structural reforms in Member States.

Besides working in close collaboration with the Economic and Financial Committee, the EPC will also cooperate closely with the Employment Committee, which promotes coordination between Member States on employment and labour market policy.

Composition and functioning of the Economic Policy Committee

The Member States, the Commission and the European Central Bank must be represented on the EPC. Each of them appoints two members from among senior officials possessing competence in the field. Members of the Committee are to perform their duties in the general interest of the Community.

Opinions or reports subject to a vote are to be adopted by a majority of members. A report must then be drafted to give account of the minority views. Where reports concern issues on which the Council may subsequently take a decision, members from central banks and the Commission may not participate in the vote.

The Committee is consulted by the Commission on the maximum rate of increase for non-compulsory expenditure of the EU's general budget. It also delivers opinions at the request of the Council, the Commission or the Economic and Financial Committee or on its own initiative.

Proceedings of the Committee are confidential. However, its reports or opinions are made publicly available, unless there are overriding reasons to keep them confidential. Reports are published on the EPC's Internet site.

In 2003 the composition of the Committee was revised, reducing the number of representatives of the Member States, the Commission and the ECB to two each. Previously, they could each appoint four representatives. This change was necessary to prepare for the EU's enlargement on 1 May 2004 and to ensure that the Committee can function smoothly. The number of EU Member States rose to 27 with the accession of Bulgaria and Romania on 1 January 2007.

Background

Founded in 1974, the EPC has taken over the tasks previously assigned to the Short-term Economic Policy Committee established by the Council Decision of 9 March 1960 on coordination of the conjunctural policies of the Member States, to the Budgetary Policy Committee set up by the Council Decision of 8 May 1964 on cooperation between the competent government departments of Member States in the field of budgetary policy, and to the Medium-term Economic Policy Committee set up by the Council Decision of 15 April 1964 setting up a Medium-term Economic Policy Committee.